Labor and Material Shortages Restrict Economic Growth in the Northwest, NatWest PMI Reports
Economic growth in the Northwest has plummeted to its slowest rate since February last month – due to shortages of labor and raw materials.
According to the latest regional PMI data from NatWest, private sector business activity in the Northwest continued to expand in September, but growth was constrained by supply bottlenecks and staff shortages. .
The PMI business activity index tracks the monthly variation in the production of goods and services in the private sector. A reading above 50 shows growth, with higher numbers signaling faster expansion, while anything below 50 shows contraction.
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In the Northwest, that figure stood at 54.9 in September – up from 55.3 in August, signaling growth for the eighth consecutive month – but at its slowest pace since February.
NatWest said when companies reported more activity, they linked it to improving demand conditions and an associated increase in new business.
Richard Topliss, Chairman of the NatWest North Regional Council, said: “Business activity levels continued to pick up in Northwestern companies in September, but PMI data indicated that the pace of growth has slowed down. still slowed down.
“It’s not surprising to see growth slow after the initial phase of reopening in the summer, but at the same time companies are telling us that bottlenecks and labor shortages are also holding back activity. .
“These imbalances in supply chains and in labor markets continue to put pressure on prices, and this is reflected in a record rate of input cost inflation in the Northwest.
“Nonetheless, local businesses remain very optimistic about the business outlook for the coming year, and they are working to strengthen their operating capacities by hiring more staff.
PMI data showed a seventh consecutive monthly increase in new job entries for Northwestern businesses. The pace of expansion has been solid but has slowed down to the weakest in the aforementioned streak.
When growth was reported, panel members mentioned an improvement in demand from domestic and international customers. However, anecdotal evidence suggests that the recovery has been constrained by labor and raw material shortages.
NatWest said businesses in the Northwest remain “strongly convinced” that production will increase over the next 12 months as the recovery from the pandemic is expected to continue.
Panelists said they expect to gain market share, improve productivity, launch new products and services and boost investment as demand conditions continue to strengthen.
The overall level of confidence fell only slightly compared to August, thus remaining well above its long-term average.